MPs list failures at heart of health deficits

A committee of MPs will report today that it has found "compelling evidence" of a failure of financial management within the NHS. The Labour-controlled health select committee says ministers and hospital managers failed to estimate the effects of an "extraordinary growth in staff costs arising from pay rises and a large increase in staff numbers", and the NHS responded to its ballooning deficits by slashing the amount spent on training. "This is unacceptable," say the MPs.

The report comes as William Moyes, regulator of foundation hospitals, warned that financial instability was spreading from the NHS mainstream to affect the elite institutions under his supervision. He said foundation trusts made a £36m surplus over the first six months of the financial year, but many had become mired in disputes with cash-strapped primary care trusts which were withholding payment for patients already treated.

The select committee says government estimates of the cost of new contracts for health workers were "hopelessly unrealistic", targets to reduce patients' waiting times were imposed without regard to cost, and the NHS was trying to balance the books this year by taking money from "soft targets", including medical training and mental health.

The committee concludes: "In recent years the NHS veered from one priority to the next as the political focus has changed. It has concentrated on meeting targets with too little concern for finance."

The health secretary, Patricia Hewitt, blamed the problem on 20% of NHS trusts that were responsible for 90% of the deficits. "We are working closely with them to put this right," she added.